Let Chris Christie Legalize Sports Gambling. It Won't Ruin the Game.

October 22, 2014

Last Friday, New Jersey Governor Chris Christie signed into law a bill legalizing sports gambling in his state. Casinos and racetracks began preparing to take bets as soon as this weekend. But the four major sports leagues and the NCAA, who say the law violates a federal ban on sports gambling, filed a motion Tuesday to stop the law from taking effect. Now it's up to a federal judge to decide.

It's a legal matter, but earlier this month Mark Varga argued in The New Republic that central issue is the integrity of the game: that legalizing sports gambling in America would lead to scandals like match fixing. There's no evidence to support his argument. In fact, legalizing gambling would make the game even cleaner and more transparent.

As Varga notes, state-sanctioned sports gambling is illegal in most states under the Professional and Amateur Sports Protection Act (PASPA). When it passed in 1992, PASPA prohibited states from “sanctioning” sports gambling unless they had laws regulating the activity within a year of the bill’s enactment (it excluded gambling on jai alai and pari-mutuel horse and dog racing).

This could all change if New Jersey has its way. Proponents of legalized sports betting hope the case will reach the U.S. Supreme Court, and that the Court will agree with the position detailed in a letter to Congress by the Department of Justice in 1992—that PASPA is an unconstitutional violation of states’ rights (the current DOJ supports the constitutionality of the law). That would lead the Court to overturn it, leaving it up to states to decide whether they want to legalize sports betting within their borders.

Original supporters of PASPA hoped that limiting sports betting would prevent minors from gambling and help reduce crime along with preventing match fixing. But Varga argued otherwise. “Betting should stay illegal not because it poses a dangerous moral hazard to individuals but because it leads to a marked increase in match-fixing,” he wrote. To support this conclusion, he pointed to European countries where sports betting is legal that have had high-profile cases of match-fixing—like Greek soccer, where match-fixing is “institutionalized.” But correlation isn’t causation. There are also countries like Britain and Australia where sports betting is also legal and widespread and match-fixing is rare.

“Sports betting is a $1 trillion industry globally,” Varga noted. “Why should the U.S. be left on the sidelines while the rest of the world profits?” But America isn’ton the sidelines. Americans spend about $380 billion on illegal sports gambling every year, according to some estimates. That means in 2012 Americans spent more on illegal sports betting than on prescription drugs and nearly five times that year’s lottery sales. Why hasn’t this led to match-fixing in U.S. sports (as far as we know)?

Varga’s argument rests on the notion that if refs, coaches, and players can legally gamble on sports they will be motivated to throw or call games for financial gain. But illegal betting poses the same risk. If gambling were done through legal channels, it would be much easier for the leagues to spot those connections and discipline offenders. Additionally, bribery of an athlete is already a federal crime and that will not change if states were allowed to legalize sports betting.

Varga raised the specter of organized crime, but the international examples he cited have little bearing for the U.S. The very same organized crime syndicates that engage in match-fixing in other nations (such as the Triads in China) operate within the U.S., yet match-fixing is rare here. Perhaps there are more differences between U.S. sports and the rest of the world beyond the legal status of sports gambling?

For an answer, we can look to the “black sox scandal,” the White Sox team that conspired to throw the 1919 World Series. Varga warned of a repeat of this episode if we legalize sports betting. But this story serves a good example of why match-fixing is an anomaly in U.S. sports—and will remain so even with legalized sports betting. All eight players involved in the scandal were banned from Major League Baseball for life. Today, American sports leagues take gambling by players and match-fixing very seriously: The NCAA has a zero-tolerance policy for athletes gambling; the MLB and NFL prohibit gambling by players, coaches, and referees; and the NBA prohibits betting on NBA games. Match-fixing carries serious consequences such as lifetime bans and civil lawsuits—as happened to Tim Donaghy, the NBA referee who in 2007 was accused of betting on and fixing matches. And let's not forget Pete Rose, baseball's all-time hits leader, who was banned from the game and remains ineligible for the Hall of Fame.

Thisis what is working for American sports: the leagues’ self-interested motivation to weed out anything that will lessen fans' interest and players’ and officials’ desire not to risk destroying their lucrative careers. The teams and leagues, for the most part, are private businesses interested in preserving the perceived fairness of the game so that they can keep making money. That’s why it’s their responsibility. And that is where the regulation of sports integrity should stay.